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Fraport Greece signs €1billion loan agreement also with Greek banks to finance 14 regional airports modernization

This is how privatization looks like: Greek banks lend the German state millions so it can buy Greek airports and modernize them. This is investment in the debt-ridden country. A consortium of financial institutions signed a long-term agreement worth approximately 1 billion euros with Fraport Greece to finance the 40-year concession contract of the 14 Greek regional airports, according to a Black Sea Trade and Development Bank announcement on Monday.

A consortium of leading financing institutions has signed a long-term financing of approximately EUR 1 billion with Fraport Greece for the 40-year concession of the 14 Greek regional airports. The consortium of lenders includes: Alpha Bank (EUR 284,7m), Black Sea Trade and Development Bank (EUR 62,5m), European Bank for Reconstruction and Development (EUR 186,7 m), European Investment Bank (EUR 280,4 m), and the International Finance Corporation (EUR 154,1 m), a member of the World Bank Group. IFC is also is also the sole provider of Euro interest rate hedging swaps to help Fraport Greece hedge potential fluctuations in interest rates through the term of the loan.

EUR 280,4 million of the total loan will be used for the financing of the imminent development works at the 14 airports, while EUR 688 million will be used as part of the upfront concession payment (EUR 1,234 billion) to the Hellenic Republic Assets Development Fund. Fraport Greece recently also announced a capital increase raising the company’s total capital amounts at EUR 650 million.

Fraport Greece, a joint venture of Fraport AG Frankfurt Airport Services Worldwide and Copelouzos Group, is paying a total of EUR 1,234 billion for the concession to the Hellenic Republic Asset Development Fund. This constitutes the biggest concession fee ever paid in the history of the Hellenic Republic. Through this investment the two shareholders demonstrate their willingness to support the country’s efforts to achieve recovery as well as their trust in Greece’s potential. The agreement also includes the modernization and upgrading of airport infrastructure. Fraport Greece will invest at least EUR 400 million during the first four years in construction works for the development of the airports that will support the development of the tourism industry, a key driver of the Greek economy. During the period of the entire concession, infrastructure investments will exceed EUR 1,4 billion.

The 14 airports that are included in the concession are: Aktion, Chania (Crete), Kavala, Kefalonia, Kerkyra (Corfu), Kos, Mitilini, Mykonos, Rhodes, Samos, Santorini, Skiathos, Thessaloniki – Greece’s second largest city – and Zakynthos. Combined, these airports served a total of about 25,2 million passengers in 2016.

Fraport AG is one of the leading companies in the international airport business active on four continents through investments and subsidiaries. With Frankfurt Airport, its home base, the company operates one of the world’s most important air transportation hubs. In total, Fraport employs around 21,000 people worldwide. Copelouzos Group is a leading business group with a wide range of activities in core sectors of the economy such as, among others, energy, airports, development and real estate management.

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “Modern infrastructure will play a crucial role in supporting Greece’s economic recovery. This requires sustained investment to ensure that it achieves its full potential to create jobs and spur growth. This agreement, with the support of the Commission, succeeds in mobilising private investment to finance upgrades to growth-enabling infrastructure that will support, for example, tourism and mobility. This is a prime example of the type of investments the European Commission is committed to support, as they bring growth and development.”

Alexander Zinell, Fraport Greece CEO commented: “The signing of the financing for the largest concession in Greece is a historic moment. Together with the equity injected by our shareholders, the proceeds of the loans will help funding the upfront payment and the four-year airport rehabilitation program. The successful financing of this complex project is a clear signal regarding the prospects of the Greek economy and the confidence in our company and the reliability of our shareholders Fraport AG and Copelouzos Group. The Hellenic Republic has entrusted us with 14 airports across the country, most of them gateways to thriving tourist destinations. We are proud to play a significant role in the future development of these destinations and in support the country’s tourist industry.”

Vangelis Baltas, Fraport Greece CFO said: “This agreement has been the result of a long and fruitful procedure. After 15 months of intense work Fraport Greece signed with Alpha Bank, BSTDB, EBRD, EIB and IFC a financing programme with a total volume of nearly EUR 1 billion. Due to the overall positive impacts of the project on the Greek economy the financing partners supported the transaction from the beginning. Together with the sponsors contributions, the total investment amount consists of more than EUR 1,65 billion. We have all worked together ensuring that this complex project is met with success. We would like to thank our partners for their efforts and contribution to laying solid foundations for the future course of the concession project”.

Capex loan:
Jonathan Taylor, EIB Vice President, who is responsible for Greece, stated: “The European Investment Bank is pleased to be investing to expand and improve 14 regional airports in Greece. This is a nationally, and regionally, important project. It will create jobs, and provide a major boost for tourism – a sector that has proved its importance, and resilience, during the crisis. The EU Bank will support further investments in Greece that promote growth and help create sustainable and high quality employment.”

Acquisition loan:
Ioannis M. Emiris, Executive General Manager at Alpha Bank, said: “We are proud to arrange, jointly with major International Financial Institutions, the financing of the most significant foreign direct investment in Greece in recent years. The 14 regional airports together constitute the major international gateway for Greek tourism, a key contributor to the country’s GDP. The financing will support Fraport Greece in increasing the capacity and improving the operational efficiency of these airports, creating new opportunities and advancing the welfare of the respective communities and regions. Alpha Bank remains committed to deliver financing solutions that support economic growth, reinforce the competitiveness of our economy and create new jobs”.

Ihsan Ugur Delikanli, BSTDB President said: “As a Multilateral Development Bank headquartered in Greece, we are particularly happy to contribute to this major infrastructure project that has a paramount development impact on the Greek economy. This is an important investment in the future of Greece. Furthermore, the project is strengthening synergies among MDBs and private partners and promotes developmental effectiveness for the benefit of this country and the region”.

Phil Bennett, EBRD First Vice President and Head of Client Services Group, said: “We are delighted to participate in this landmark transaction, which we expect to provide a much needed boost to the Greek economy and in particular Greece’s regional development. The modernisation of this key infrastructure, supporting tourism in particular, will improve access, exchange and integration. EBRD is particularly pleased to support strategic partners who will bring private funding and expertise to the regional airports in Greece and could provide an important model for future infrastructure development projects.”

Dimitris Tsitsiragos, IFC Vice President of New Business said: “Well-managed airports around the world have proven to serve as economic engines. This landmark concession is an excellent example of how the private sector can step in to support the Greek economy by generating revenues for the government, creating jobs and boosting confidence in vital sectors. IFC’s involvement in tourism and infrastructure can attract additional investments and encourage new development projects to promote economic growth.” ( BSTDBank)

PS Greece share in the loan is multiple as Greece is member of the above mentioned international and European banks.

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3 comments

  1. One question for whoever can answer: why should (and where from) insolvent Greek banks participate with loans in this venture, and at which terms? What’s wrong with Deutsche Bank or others?

  2. Because the Greek banks are part of crony capitalism? In other words, there is no clear distinction in advanced capitalism between state and private sector: they are caught up in mutual self-interest, with ordinary citizens paying the price for their heady mix of incompetence and corruption.
    ~
    The paradox is that northern Europe and the USA claimed to be operating a completely different system from the messy things going in Greece and the rest of the South — where State interests dominated the private sector. They have now succeeded in turning all of the EU and North America into something resembling the Greek economy — all the time complaining about what a disastrous mess the Greek economy was or is. Does anyone else see the problem here? LOL

  3. Giaourti Giaourtaki

    Expensive “jobs”: A 16 bln minimum loss in revenues to Greece if airport-fees would have stayed like before being bought by Frankfurt Subways and only 20 million passengers annual would pay in these next 40 years.
    Just give every unemployed half a million Ois is cheaper but this counts for close to any jobs-creation in countries suffering from Reaganomics – not to mention that for most of these jobs they bring their own stuff